Finance
Under Washington law, a hard money lender who charges excessive fees and interest rates on a mortgage loan to a consumer may face liability under:
AThe Washington Consumer Loan Act (CLA) and potential predatory lending claims✓ Correct
BOnly federal TILA requirements
CNo liability because hard money loans are unregulated
DOnly criminal usury laws that apply to rates over 50%
Explanation
Washington's Consumer Loan Act (RCW 31.04) regulates consumer lending including hard money and private loans, requiring licensing and prohibiting predatory terms.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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